A declaratory judgment action is a type of lawsuit that allows businesses and individuals to seek a court's conclusive ruling on an uncertain legal issue. This HowTo Guide explains how to bring an action for declaratory relief to resolve liability insurance disputes.Courts have traditionally held that an insurance company has no right to intervene in the liability action against the insured to seek a coverage determination. If an insurance company has refused to defend a lawsuit, or if you are facing a declaratory relief action, you need an experienced insurance lawyer. A declaratory judgment is a binding judgment from a court defining the legal relationship between parties and their rights in a matter before the court. A Defending Insurer's Reserving Rights and Seeking Declaratory Judgment Does Not Constitute Bad Faith in California. Courts are sometimes asked to issue declaratory judgments to determine whether an insurance contract provides coverage to an insured. Columbia is in the business of providing and underwriting insurance. A declaratory judgment does not determine whether you are entitled to damagesit simply assesses your right to insurance coverage. Santa Clara County, CA. Filed Date.